You may no longer get a hefty discount on a Maruti Suzuki car

Bhargava feels that it was not a good way to sell cars by giving high discounts.

ET Online|

Updated: Jan 28, 2019, 01.43 PM IST

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Bhargava feels that it was not a good way to sell cars by giving high discounts.

You may no longer get a hefty discount on a Maruti Suzuki car. In the previous year, the company offered discounts to boost sales. The discounts touched a record high in the third quarter of the current financial year. But after posting a double-digit year-on-year dip in profit for the quarter ended December 31, it is reconsidering its strategy to offer discounts.

RC Bhargava, the chairman of Maruti Suzuki, thinks that buyers should not get used to discounts. "Once you start offering high discounts, customers' behaviour changes and they expect discounts round the year," he told Business Standard.

Bhargava said the policy of discounting required a relook and that it was not a good way to sell cars by giving high discounts. The company offered a record average discount of Rs 24,300 per vehicle in the third quarter in order to clear the unsold inventory after a lacklustre season, BS reported. This discount was high compared to Rs 18,800 in the second quarter and the average of Rs 19,400 for the April-December period.

The 17.21 per cent drop in third quarter profit marked the second consecutive quarter of negative growth for the auto maker. The largest domestic passenger vehicles maker had reported 9.82 per cent drop in bottom line in September quarter.

The company said adverse commodity prices, adverse foreign exchange rates, higher marketing and sales expenditure and higher costs in resources and capacities -- earlier planned to enable a higher estimated growth -- hurt the quarterly numbers. The numbers could have been worse had not the company initiate cost-reduction measures

In addition to lower discounts, the company has undertaken price hikes, which should aid March quarter numbers.

For five years, Maruti Suzuki has led India’s consumption drive, rolling out more models than rivals and establishing its credentials as an SUV maker, stepping out of its identity as a compact-car specialist. That ride is now turning bumpy as tepid overall demand and rising input costs finally take their toll on the undisputed industry leader.